Social Security Social Security Retirement Benefits Pensions Savings & Investments Other Income 2016

2  Early, Full or Delayed Retirement;  Benefit estimates: my Social Security and the Retirement Estimator;  Working while in retirement;  Medicare at age 65;  The easiest way to apply for benefits. Thinking of Retiring? Some things to consider:

3  Social Security credits are earned only through FICA contributions;  FICA contributions: ( 15.3% contributed in FICA per gross pay check) *Social Security: Employee/employer each pay 6.2% on gross earnings up to $118,500 (2015 cap); *Medicare: Employee/employer (each pay) 1.45% on all gross earnings (no cap). Qualifying for Retirement Benefits

4  You need to work to earn Social Security “credits”  Each $ 1,260 in earnings gives you one credit  You can earn a maximum of 4 credits per year Example: To earn 4 credits in 2016, you must earn at least $ 5,040. Earning 40 credits (10 years of work) throughout your working life will qualify you for a retirement benefit. How Do You Qualify for Retirement Benefits?

5 What You Can Expect at Full Retirement Age 55% 41% 34% SS benefits replace only a portion of preretirement earnings. The SS Formula is weighted in favor of lower lifetime wage earners.

6 Factors Determining Your Benefit Amount Social Security Benefits Are Based On Earnings  Your earnings are adjusted for inflation;  We use your highest 35 years of earnings;  Your ‘average indexed monthly earnings’ used in computation 25 4

7 Your Age at the Time You Elect Retirement Benefits Affects the Amount  Age 62 75% of benefit  FRA 100% of benefit  Age % of benefit *Reductions for early retirement age are permanent.

8 Full Retirement Age: Year of BirthFull Retirement Age 1937 or earlier & 2 months & 4 months & 6 months & 8 months & 10 months 1943 – & 2 months & 4 months & 6 months & 8 months & 10 months 1960 or later67

9 You Can Receive Benefits & Still Work If You AreYou Can Make Up To If You Make More, Some Benefits Will Be Withheld Under Full Retirement Age $ 15,720/yr. ( $ 1,310/mo.) $ 1 for every $ 2 The Year Full Retirement Age is Reached $ 41,880/yr. ( $ 3,490/mo.) $ 1 for every $ 3 Month of Full Retirement Age and Above No Limit 2016

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11 Use the Retirement Estimator  Uses your actual earnings record for estimates;  Immediate and accurate benefit estimates;  Convenient, secure, and quick financial planning tool;  Lets you create “What if” scenarios based on different ages and earnings;  Does not incorporate WEP reduction; use WEP calculator instead.

12 WEP online calculator WEP Online Calculator *input SS earnings history

13 8 my Social Security Access your BENEFIT STATEMENT here!

14 my Social Security If you’re not yet getting benefits, you can: Review estimates of your/your dependents future benefits; Make sure your SS earnings are posted correctly to date; Review the estimated Social Security and Medicare taxes you’ve paid; View, save, and print your Social Security Statement. If you’re getting benefits, you can: Check your benefit and payment information Change your address, phone number, start or change your direct deposit information; View & print your 1099; Get your benefit verification letter instantly online and use it as official proof of your income if you apply for a loan/mortgage,

15 Who Else Can Get Benefits on Worker’s Record? Your Child Not married under 18 (under 19 if still in high school) or Not married and disabled before age 22. Your Spouse Age 62 or older; Any age, if caring for your child under age 16 or disabled; Spousal Benefit Computation (No GPO involved):  Benefit is 50% of worker’s unreduced benefit;  Does not reduce payment to worker;  Offset by spouse’s own SS amount.

16  Husband gets $1,000 on his own SS record, wife is potentially eligible for ½ ($500) on his record;  If wife gets $300 on her own SS record, wife does not receive the full $500 on husband;  Wife gets her $300 and $200 on husband $500 – $300 = $ (a $ for $ offset) Example of Spousal Benefit Computation (No GPO involved)

17 Widow or Widower: Full benefits at full retirement age; Reduced benefits at age 60; Can take reduced benefits at 60 & then switch to higher benefit on the other record: (only widows(ers) ‘can switch’ to a higher benefit if prior to FRA ); If disabled (SSA), as early as age 50 (reduced benefits); At any age if caring for child under 16 or disabled; If remarried, only if after age 60 (50 if disabled); Divorced widows/widowers may qualify; Eligibility does not affect other recipients’ benefit amounts

18 Ex-Spouse  If marriage lasted at least 10 years (all other criteria applies);  At age 62 or older;  Not be married;  Does not reduce benefits of other recipients;  Divorced at least two years and you and your ex-spouse are at least 62, he or she can get benefits even if you are not receiving retirement benefits.

19 You may be affected by the Windfall Elimination Provision if:  you will receive a Social Security check, and  you will also receive a pension based on work not covered by Social Security; The Windfall Elimination Provision does not apply to survivors benefits. Note: estimates on my SS (Benefit Statement) are not accurate if you are affected by WEP. Use the online WEP calculator for estimates. Windfall Elimination Provision 39

20 The SS Benefit Formula & WEP Important to remember:  The SS formula uses your 35 highest years of SS earnings;  The SS formula is weighted in favor of lower lifetime wage earners;  Since the highest 35 years of SS earnings are used to determine average indexed monthly earnings (AIME), zeros are added-in when less than 35 years are worked under SS;  This creates an artificially low AIME for WEP employees & provides a higher rate of return intended only for lower lifetime wage earners;  It gives a medium or high lifetime wage earner the advantage of the weighted SS formula;  The WEP Provision takes back that advantage when it reduces the SS.

21 Windfall Elimination Provision (WEP) Normal ComputationWEP Computation 90% of the First $ 82640% of the First $ % of the Next $ 4,15432% of the Next $ 4,15415% of the Remainder

22 WEP & ‘Substantial Years’ of SS Earnings *Our online WEP calculator incorporates ‘substantial years’ in its estimates.

23 Most Common Exception to WEP Years of Substantial Social Security Paid % of First Factor in Benefit Formula that you are paid % 2985 % 2880 % 2775 % 2670 % 2565 % 2460 % 2355 % 2250 % 2145 % 20 or fewer40 % * Few other exceptions apply to WEP – see your WEP handout. normal computation used

24 Government Pension Offset (GPO)

25 Government Pension Offset (GPO) Applies to Spouse’s Benefits Only  2/3 of amount of government pension will be used to reduce the Social Security spouse’s benefits Example:  $1,200 of government pension 2/3 = $800 Social Security spouse’s benefits = $750 No benefit payable by Social Security  Our Online GPO calculator allows you to estimate your Social Security benefit.

26 Government Pension Offset (GPO)  Under GPO, SS counts 2/3 of your government pension and reduces your SS spousal benefits by that amount - (The SS benefit may offset entirely). Example: Wife receives a gov pension… Is wife eligible for some of husband’s SS? 2/3 of wife’s $1,200 government pension = $800 Husband’s SS benefit on his own record = $2,000 $2,000 ÷ ½ = $1,000 /mo. (amount of spousal benefit potentially due wife); * If 2/3 of wife’s gov pension is more than ½ of husband’s SS, $0 is payable to wife; $1,000 - $800 = $200/mo. (amount of SS spousal benefit payable to wife). *If wife is due SS on her own record also, her SS spousal benefit is further reduced.  Use the GPO calculator at  Few other exceptions apply to GPO – see your GPO handout.

27 SS Benefits May Be Taxable By IRS  The (IRS) is the agency responsible for assessing and collecting taxes on benefits;  As a general rule, you will have to pay taxes if you: File as individual & total income > $25,000; File joint return & total income > $34,000  Social Security mails recipients a 1099 for income tax purposes yearly (duplicates available on SSA website).  If a beneficiary has to pay taxes on their benefits:  they can make quarterly estimated tax payments to the IRS;  or choose to have federal taxes withheld from their benefits (IRS Form W-4V, Voluntary Withholding Request)

28  Apply online at convenient and very easy!  Call to schedule an appointment to apply at your local office. How Do I Apply for Retirement Benefits?

29 18 Applying for benefits – Go online!

30 Applying for Retirement Benefits 20

31 Applying for Retirement Benefits

32 Click To Sign Application 23

33 65 & older -or- 24 months after entitlement to Social Security disability benefits -or- SS disability due to: Who Can Get Medicare ?  Amyotrophic Lateral Sclerosis  Permanent kidney failure – regular dialysis  Exposure to environmental Health Hazards

34 Medicare Has Four Parts Part A - Hospital Insurance  Covers most inpatient hospital expenses  2016 deductible $ 1,288 Part B - Medical Insurance  Covers 80% doctor bills & other outpatient medical expenses after 1 st $ 166 in approved charges  2016 standard monthly premium $ (Higher-income beneficiaries pay higher monthly premium)

35 Individuals with MAGI above $85,000 up to $107,000 Married couples filing jointly with MAGI above $170,000 up to $214,000 Standard Premium + $42.00 (2016) Standard Premium + $42.00 (2016) *If higher MAGI than shown above = higher $ adjusted amount. *If a married couple files separately = higher $ adjusted amount. Income-Related Part B Premium Increase Determined by Monthly Adjusted Gross Income (MAGI)

36 When Can I Sign Up for Medicare Part B?  Initial – at age 65  Special – if still working  General – January-March Medicare Enrollment Periods: 36

37 Part C & Part D Part C – Medicare Advantage Plans  Health plans by Medicare-approved private insurance companies;  You can get the benefits and services covered under Part A, Part B, and in most plans, Part D of Medicare;  Must use hospitals, doctors, in that plan network. Part D – Medicare Prescription Drug Coverage  Covers major portion of your prescription drug costs & good option if you have no other coverage for prescriptions;  Out-of-pocket costs: monthly premiums, annual deductible and prescription co-payments will vary by plan;  Enroll with a Medicare-approved prescription drug provider not SSA;  “Extra Help” available for those with low income/resources;  Some plans have gaps in coverage.

38 For More Medicare Information MEDICARE ( ) TTY

39 Questions? Social Security: Medicare: